NRB Digitizes Open Market Operations, Tightens Rules for Banks

Nepal Rastra Bank (NRB) has amended its Open Market Operations Procedure, 2078 through the Ninth Amendment (2083), introducing a fully digital framework for conducting open market operations. Under the revised procedure, banks and financial institutions will be able to participate in auctions through an online system, replacing the traditional paper-based process. The central bank said the new framework aims to improve transparency, efficiency, and liquidity management while enhancing the effectiveness of monetary policy implementation. NRB will also publish information related to its open market operations through its official website and other electronic platforms to strengthen transparency. The revised procedure also introduces stricter disciplinary measures for banks and financial institutions. Institutions that fail to complete approved transactions on time, delay the submission of required securities or documents, or violate procedural requirements will face a 2.5% penalty and a six-month suspension from participating in open market operation auctions. In addition, the Open Market Operations Committee will now meet every Friday to review liquidity conditions, while auction allocations with identical interest rate bids will be distributed on a pro-rata basis. The amendment also clarifies provisions related to long-term repo operations, deposit collection instruments, Treasury bill transactions, and the regulatory treatment of funds mobilized through repo and deposit collection facilities.